Random Market News, 14 July
"China's fiscal spending jumped 19.1 percent in June from a year earlier, quickening sharply from a 9.2 percent rise in May and signaling government efforts to cushion a gradual slowdown in the world's second-largest economy.
Central government spending rose 10.2 percent in June from a year earlier while local government spending soared 20.3 percent, the finance ministry said on Friday.
China has kept its budget deficit at 3 percent of gross domestic product (GDP) for 2017, the same as last year, and pledged to clamp down on risks associated with local government debt."
"Public and Private Equities Drive CalPERS Returns.
The state’s retirement system earned its best returns in three years thanks to its public and private equity portfolios but remains underfunded.
The pension fund earned 11.2 percent over that time period, with its public equity portfolio notching a net return of 19.7 percent and its private equity portfolio returning 13.9 percent. The pension’s assets stood at more than $323 billion at the end of the fiscal year.
CalPERS remains underfunded. According to the pension, it is 68 percent funded, an increase of 3 percentage points since fiscal year 2015."
"AP funds set for 40% illiquids cap as government relaxes mandates.
The Swedish finance ministry has announced a number of draft changes including a new 40% ceiling on illiquid investments in place of the current 5% lid on unlisted instruments, with the new allowance to include real estate – which is unlimited under the current rules."
"Switzerland will go to the polls in September to vote on the entire Altersvorsorge 2020 (AV2020) pension reform package as opposed to just an increase in value-added tax (VAT)."
"Meet the Manager Willing to Give Investors Back Their Fees.
An innovative fee structure means fund firm Orbis returns money to investors in down years.
The $28 billion, Bermuda-based global equity manger has a different approach: it actually gives money back to institutional investors in years when it does not beat its benchmark. “All fees are performance based, but we return the fees in periods where we underperform,” explains Adam Karr, Obis’ U.S. managing director, who is based in San Francisco."
"Q2 and the big dipper.
The week is perhaps best summed up by the Fed's own Beige Book which downgraded the general assessment of economic strength from modest-to-moderate to slight-to-moderate. The Beige Book does warn of tight conditions in the labor market, that is lack of available labor relative to demand for labor, but its assessment of ongoing wage gains is flat while its assessment of general inflation is soft. It may after all be the lack of inflation that's keeping consumers content with limited wage growth, and certainly weak wages are consistent with weak retail spending. The second quarter was supposed to be a grand one after the first quarter's slowdown, but it doesn't look like it's shaping up that way."
"Markets get fill of Fed.
Most equity indexes advanced after Fed Chair Janet Yellen's dovish testimony in Congress. It was a relatively light week for economic data and it was mixed. A positive was the continued strength in the UK labour market. However, data from Japan disappointed while data from China were mixed with consumer and producer prices stagnant but at the same time strong growth in merchandise trade.
The European Central Bank meets Thursday with no change in policy expected. Investors will be looking for signs that the ECB will follow the Fed and begin to curtail its stimulus. No changed is expected from the Bank of Japan and there is little expectation of a change in policy. China reports second quarter growth along with June industrial production and retail sales. Investors continue their search for stronger Chinese growth. In Canada, traders will be looking for strength from the consumer in May retail sales data."
Implied rate hike probability on July 26th ~3.1%, September 20th ~8.2%; 0% probability of rate cut through June 13th, 2018.
VIX ~9.51. 10-yr treasury vol (TYVIX) ~3.75.
"US Stocks Climb To Book Strong Weekly Gains
Wall Street closed moderately in the green on Friday July 14th of 2017, as softer US inflation strengthened the case for no interest rate move in the September FOMC meeting. Consumer prices rose 1.6% YoY in June, below 1.9% in May and compared to expectations of 1.7%. Financial shares outperformed the market on better-than-expected earnings. The Dow Jones advanced 85 points or 0.4% to 21637, while the S&P 500 gained 11 points or 0.5% to 2459. Both indices booked fresh records. Meanwhile, the Nasdaq climbed 38 points or 0.6% to 6312. During the week, all three major indices notched strong gains, with the Dow Jones surging 1.0%; the S&P500 1.4%; and the Nasdaq 2.6%.
Dollar Weakens After US Inflation Data
The dollar index dropped 0.4% to 95.32 around 9:45 AM New York time on Friday, after weaker-than-expected inflation data from the US reduced chances that the Federal Reserve will increase interest rates in September.
US Consumer Sentiment Below Estimates In July
The University of Michigan's consumer sentiment for the United States fell to 93.1 in July of 2017 from 95.1 in June, well below market estimates of 95, preliminary estimates showed. It is the lowest reading since October of 2016, mainly due to a fall in future expectations.
China Fiscal Spending Soars 19.1% YoY In June
Fiscal expenditure in China jumped 19.1 percent from a year earlier in June of 2017, much faster than a 9.2 percent rise in the prior month. The pick-up in fiscal spending was mainly due to faster funding allocation to guarantee the key expenditure needs under a drive to make fiscal policy more active and effective this year, the finance ministry said in a statement on its website. Meantime, China's fiscal revenue went up 8.9 percent in June, following a 3.7 percent growth in a month earlier. Considering the first six month of the year, fiscal expenditure rose 15.8 percent compared to the same period the prior year. Fiscal revenue from January to June 2017 increased by 9.8 percent.
Malaysia Retail Sales Rise The Most In Over 3 Years
Retail sales in Malaysia rose 13.1 percent year-on-year in May of 2017, following a 12.9 percent gain in April and marking the fastest increase since February 2014. Wholesale trade increased by 9.0 percent (from 8.6 percent in the previous month) and sales of motor vehicles jumped by 10 percent (from 4.0 percent). On a monthly basis, retail trade went up 2.7 percent, rebounding from a 3.6 percent fall in a month earlier.
Mexico Stocks Jump 0.4% On Friday To Fresh Records
Mexico’s IPC jumped 193 points or 0.4% to 51162, as softer US inflation strengthened the case for no interest rate move in the September FOMC meeting, boosting equities across the board. Among other markets in America, Brazil’s iBovespa gained 258 points or 0.4% to 65436. Chile’s IPSA climbed 14 points or 0.3% to 5000, also booking a new high. Canada’s TSX advanced 40 points or 0.3% to 15175. Contrastingly, Argentina’s MERVAL lost 96 points or 0.4% to 21880 and Colombia’s COLCAP retreated 4 points or 0.3% to 1488.
Brazil Economic Activity Shrinks The Most In 9 Months
The IBC-Br index of economic activity in Brazil fell 0.51 percent month-over-month in May of 2017, following a downwardly revised 0.15 percent rise in April and compared to market expectations of a 0.5 percent gain. The reading pointed to the biggest contraction in economic activity since August of 2016. Year-on-year, the output was flat.
Kyrgyzstan Industrial Output Rises 21.2% YoY In June
Industrial production in Kyrgyzstan rose 21.2 percent year-on-year in June of 2017, easing from a 28.8 percent jump in the previous month. Production slowed for manufacturing (32.2 percent vs 32.5 percent in May) and water supply and sewerage (3.3 percent vs 6.2 percent) and fell for electricity, gas, steam and air conditioning (-34 percent vs 12.7 percent). In contrast, mining and quarrying output accelerated (106 percent vs 3.7 percent).
Stocks in Singapore Hit 23-month High
STI increased to a 23-month high of 3284.
Dollar Index Hits 44-week Low
US Dollar decreased to a 44-week low of 94.92.
Canadian Dollar Hits 14-month High
USDCAD decreased to a 14-month low of 1.265.
British Pound Sterling Hits 42-week High
GBPUSD increased to a 42-week high of 1.3074.
Swedish Krona Hits 55-week High
USDSEK decreased to a 55-week low of 8.3199."
"28th Annual State of Logistics: Into the great unknown.
E-commerce continues to fuel a boom that’s tempered by overcapacity, rate pressures, sluggish demand and political doubt. The result: “cognitive dissonance” that finds a $1.4 trillion market scratching its head."
"Kenco’s 3PL study points to need for innovation.
The State of the 3PL Innovation Survey found that nearly 85% of respondents defined innovation as “process improvements” or “business model innovation.”"
"Truckload spot market activity flourishes in June, reports DAT.
June was a booming month for spot truckload freight activity, according to data issued this week by DAT Solutions in its DAT North American Freight Index. DAT defines the North American Freight Index as a measure of conditions on the spot truckload freight market."
"The Lebanon City Council on Monday night unanimously approved more than $2 million in tax incentives to lure a fast-growing logistics company that has proposed opening a major distribution center that would employ nearly 1,200 people.
XPO Logistics Supply Chain Inc. plans to lease an existing 1.2 million-square-foot warehouse on a 49-acre site at 135 S. Mount Zion Road, just southwest of Interstate 65."
"The dry bulk sector should brace itself for “an explosion in orders” of kamsarmaxes, according to the latest weekly report from analysts.
More than 50 kamsarmax orders are in the pipeline: Alphabulk."
"AGT Food and Ingredients Inc., through its wholly-owned subsidiary AGT Terminal East Inc. (AGTTE), has acquired a minority interest in CanEst Transit Inc. at the Port of Montreal."
"A Chinese-backed consortium made an offer for one of the world’s largest warehousing companies, Global Logistic Properties Ltd., in what would be the biggest deal ever recorded in Southeast Asia.
GLP, whose customers include Amazon.com Inc. and DHL Worldwide Express Inc., is a major player in the booming business of storing and moving goods from suppliers to consumers. It manages nearly US$40 billion in logistics assets—a bit more than half the amount that No. 1 warehouse owner Prologis Inc. of the U.S. does. GLP says it is the biggest owner of warehouses in many of the world’s most important markets, including China, Japan and Brazil."
"The complexity of the hot pepper supply chain created problems for top U.S. health officials in pinpointing a specific pepper type and source farm as the cause of a 2016 salmonella foodborne illness outbreak, according to a new report from the Centers for Disease Control and Prevention."
"A Shipping Company’s Bizarre Stock Maneuvers Create High Seas Intrigue
Greek carrier DryShips sold vast sums of discounted shares to an offshore firm and propped up prices with ‘reverse splits,’ sending investors on a wild ride that, for many, ended with steep losses."
"AI, Robotics Dominate Toyota’s Startup Investment And M&A Bets."
"What The SoftBank Vision Fund Means For Tech Investing—VCs & Industry Leaders Sound Off.
The SoftBank Vision Fund, first announced in October 2016, has now closed at least $93B of a target $100B to invest in global technology companies – making it the largest tech investment fund in history. With moonshot ambitions to enable “the next stage of the Information Revolution” using only private capital, the Vision Fund will make $100M-minimum investments in late-stage startups in areas such as IoT, artificial intelligence, and robotics."
"‘Quora for cancer’ startup theMednet raises $1.3 million in seed funding.
Why does this startup matter so much? Doctors generally practice in small groups and depend on their networks for advice. However, doctors are limited by their own, closed network. Opening up that network to a strong group of thousands of physicians helps them connect dots and gain expert information they may not have had access to before."
"Google’s life sciences unit is releasing 20 million bacteria-infected mosquitoes in Fresno.
Verily, the life science’s arm of Google’s parent company Alphabet, has hatched a plan to release about 20 million lab-made, bacteria-infected mosquitoes upon Fresno, California — and that’s a good thing!"
"Big Data Analysis Points Toward New Drug Discovery Method.
A research team led by scientists at UC San Francisco has developed a computational method to systematically probe massive amounts of open-access data to discover new ways to use drugs, including some that have already been approved for other uses."
"Is Amazon working on a new messaging app called Anytime?
Messaging apps today are one of the most popular ways consumers communicate today, not just with each other but, increasingly, with businesses and services. Now there are signs that we could see another big player enter the messaging fray, alongside more established services from Facebook, Snapchat, Wechat and more."
"Microsoft’s Path Guide is an unconventional approach to indoor navigation.
Indoor mapping is one of those problems that seems to only have solutions that involve a great deal of money and infrastructure: beacons, lasers, emitters, scanners… who wants to install those in malls across the world?"
"Video Friday: Water Drones, Sad Robot, and Self-Driving in Duckie Town."
"17 Room Ruin.
A well-preserved Anasazi Pueblo ruin tucked beneath a desert cliff."
SG: Merchandise Trade, 8:30 PM ET (7/17)
CN: GDP, 10:00 PM ET (7/17)
CN: Industrial Production, 10:00 PM ET (7/17)
CN: Retail Sales, 10:00 PM ET (7/17)
US: Empire State Mfg Survey, 8:30 AM ET
NZ: Consumer Price Index, 6:45 PM ET
AU: RBA Meeting Minutes, 9:30 PM ET
https://tradingeconomics.com/calendar (More complete listing)